With frequent data breaches and highly insecure data security protocols, it is important for online businesses to verify the identity of their incoming users. There are several Identity proofing protocols available such as identity verification and KYC authentications solutions.
Internet fraud and cybercrimes have evolved over the years. As the number of fraudsters trying to deceive businesses to purchase goods and services has increased astronomically, the need to build sound measures for identity proofing has also developed. Physically stealing identities is no longer important for fraudsters to commit identity theft or credit card fraud. Simply having access to an individual’s personal information can allow them access to their accounts and funds.
This kind of digital identity theft has also become easier to perform, thanks to large scale data breaches happening all over the world in which sensitive personal and financial information of millions of users is compromised. That information eventually lands into the dark web-based data black markets where any scammer can buy the identity of an authentic user and defraud any business that suits him. Before the business or the person whose identity has been stolen, knows about digital crime, the scammer has availed a sufficient amount of services or buy products that are totally non-refundable. So when can assume the huge amount of risk, online identity theft and scammers pose to online marketplace and digital service delivery channels.
For businesses to improve their online security and guarantee the fact that their revenue streams remain unfazed by these digital bandits, they need to establish a system of customer verifications. Such an identity verification system is crucial to establish the authenticity of a customer, their personal and financial information and the respective proof they have to prove their personal and financial information. Such information is also known as Personally Identifiable Information or PII. This kind of verification is vital in securing the business interests, regardless of the industry that a particular company belongs to as scammers generally try to defraud any possible business venture they can, given they have lax security and identity theft protection protocols put in place.
However, there are different levels to verification and validation of a customer as well. Identity proofing of customers can include:
The verification of a customer’s identity is the baseline of establishing whether the person using an online service is even an actual person or not. The details provided by a person like a name, date of birth, SSN or ID card number or an address, need to have actual proof of existence. When the person provides actual proof of record for such information such as an ID card, passport or driver’s license, they are said to have verified their identity. The verification of identity is the bare minimum KYC or Know Your Customer requirement. Depending on the requirement of the business, or the risk level of a specific customer, the business can perform additional identity checks.
Each level of service delivery can be divided into multiple stages and each stage can require a different kind of identity verification module. For example, at the time of user registration, a business entity can require a user to present their original identity documents to corroborate their identity credentials. Then on each login attempt, the user can be asked to showcase their face in front of a webcam. The facial features can act as biometric markers necessary to authenticate each login attempt by performing a face match with the facial details saved from the face image present on the identity document.
The validation of a customer involves checking to see if the records provided by a customer are for a real person or is the ID and information fake. It is not too difficult for a fraudster to obtain a fake ID or to forge one. Thus it is important for businesses to validate the authenticity of the information and ID provided. There was a time when checking the authenticity of the identity document was considered enough but with scams such as synthetic identity fraud and services like open banking, it is becoming harder and harder for businesses to keep up with the rising tide of payment scams and identity theft cases. Fraudsters and scammers have concocted different identities for themselves using multiple facets of information that are basically an amalgamation of personal information of more than 1 user. In this way, it becomes entirely impossible for conventional or manual verification protocols to determine the authenticity of a person’s identity.
But with the help of identity validation services, businesses can automatically check for doctored identities created in the form of Synthetic IDs. Template matching techniques are used to check for the security features and exact document formats making it impossible for a person with doctored identity to sign up as customer or user with an online business.
Now to see if your customers are legitimate and are who they say they are, they should be able to answer a set of questions only they can answer. This can reduce the possibility of fraud even more. For this purpose banks and online retailer often use Knowledge-Based Authentication (KBA). KBA entails a set of questions only that particular person can answer. They can include a customer’s mother’s maiden name, the name of their hometown, their pet’s name. They can also include questions from the customer’s transactional or credit history. This can further enhance the authentication process. Identity authentication can also be performed through biometrics i.e. fingerprint scans, facial recognition, and retinal scans.
The myriad of identity proofing procedures available to businesses can be leveraged according to a business’s requirements. Each enterprise has its own levels of fraud risks and they need to evaluate them accordingly. For example, a bank is required to implement stringent client authentication measures as they operate under more regulatory requirements than normal businesses. The use case of every company can be evaluated individually to implement the correct proofing measures. With the latest technologies such as Artificial Intelligence at the disposal of online businesses and even conventional businesses, the overall utility of such services for businesses becomes more than just a risk mitigation practice but it achieves the same importance as the marketing of the products that a certain business has to offer.